Produced by: Engineering 360 Media Solutions March 2019 Trends Impacting the Semiconductor Industry in the Next Three Years Sponsored by: Advanced Energy Big data, 5G, and artificial intelligence will transform the electronics industry, but have yet to make a major impact in the semiconductor industry. Arguably, at no point in the history of electronics has so much change happened all at once than right now. Digital transformation, the proliferation of technologies enabling the smart city and smart factory, the advent of artificial intelligence and next-generation big data, the switch to connected and self-driving cars, and the launch of next-generation wireless cellular technology are rapidly transforming life. These changes are the impetus for trends impacting the semiconductor market currently and will accelerate in the next three years, according to a new survey conducted by IEEE GlobalSpec on behalf of Advanced Energy. Big data, 5G, and artificial intelligence will transform the electronics industry, but have yet to make a major impact in the semiconductor industry. The survey asked more than 480 respondents for their opinions on what technologies will have the greatest influence on the chip industry in the coming years. It found that the next-generation wireless communications standard known as 5G which is set to succeed the 3G and 4G standards this year is expected to impact semiconductor vendors the most, with 57 percent of respondents indicating that companies should be focused on that technology. Among respondents, the second biggest trend that will impact the semiconductor industry in the next three years is artificial intelligence (AI), with forty-nine percent of those surveyed saying it will be a major issue that companies will need to contend with. Forty-five percent of respondents think the connected car will be the third-biggest trend facing semiconductor companies in the next three years, as OEMs such as Daimler, Continental, Audi, Ford spinoff Visteon and others look to include digital cockpits with gesture recognition and augmented reality displays; integrated infotainment systems with support for voice assistants and Wi-Fi; vehicle-to-vehicle (V2V) communication where cars share information regarding road safety, efficiency, traffic and weather patterns; and facial recognition and other biometric offerings. Not surprisingly, these three trends are part of what respondents are currently focused on and what impacts their daily work, along with digital transformation, big data, smart factories and smart cities. Big data is here but not yet fully realized Big data is primed to be a significant trend in manufacturing, fueled by the Industrial Internet of Things (IIoT). There is tremendous potential value in the structured and unstructured data that a company generates during day-to-day business. It does not matter how much data there is; what matters is how the data is analyzed and leveraged to reduce costs, save time, stimulate new product development and reach smart(er) decisions. According to analytics provider SAS, when combined with analytics, big data allows companies to determine the root cause of failures or defects in real-time, identify buying habits of customers, determine risk factors and detect fraud. Sponsored by: Produced by:
Table 1: The benefits that survey responders see in the implementation of big data in the electronics market. Source: Advanced Energy & IEEE GlobalSpec. However, 70 percent of respondents to the Advanced Energy survey said they are not currently using big data in their job. This may imply that there is still educational and implementation work to do in bringing big data into the smart factory and smart lab. However, that means there is an opportunity for companies providing analytics and big data to partner with companies not using the technology to incorporate it in future platforms or portfolios in the next three years. Among those using big data today, respondents said that machine learning is the most-used application (50 percent). Over a third of respondents (39 percent) using big data said they are using machine learning for image processing and manufacturing. This was followed by customer service (36 percent), workforce performance applications and supply chain management (29 percent) and artificial intelligence (26 percent). Other uses include e-commerce and natural language processing. Those using big data agreed with SAS about the benefits it will bring to companies; 59 percent believe big data will improve the customer experience; 57 percent said process insights will be improved; 51 percent said big data will bring enhanced safety; and 45 percent said the technology will help eliminate risk. Artificial intelligence is still in the nascent stage While big data is being used by some for artificial intelligence, the technology is still just getting started. AI promises to permeate all aspects of industrial and consumer electronics. But according to the Advanced Energy survey, only 26 percent of respondents are using the technology in their day-to-day jobs. This may imply that AI, while common in our day-to-day technology such as smartphones, still has a way to go to make a meaningful impact in the tools workers use in their jobs. Much like IIoT big data, this shows that the technology has room to grow in the next three years and there will be opportunities to push innovations and technological Table 2: The benefits that survey responders see with AI in the electronics market. Source: Advanced Energy & IEEE GlobalSpec. advancements into companies that could benefit from AI. Of the responders using AI right now, machine learning is the top application, with 59 percent. Again, manufacturing and image processing technology are second and third, at 45 percent and 34 percent, respectively. AI is also used for customer service by 28 percent of responders, by 24 percent for natural language processing and by 22 percent for workforce management. Other uses include supply chain management and e-commerce. The future of AI is important; 66 percent of respondents said that automation will be the biggest benefit as the technology matures. Other benefits include the designing of new and innovative solutions (61 percent), the ability to save money (46 percent), better data handling (45 percent), streamlined manufacturing (44 percent), enhanced customer experiences (35 percent) and a better understanding of customer analytics (24 percent). These benefits will impact a number of different markets, but will likely impact engineering and manufacturing the most, according to those surveyed. Medical and telecommunications will also benefit heavily from AI, as will education, aerospace, transportation, and energy segments. However, there are risks with AI. 71 percent of respondents believe that data security is a big concern. Safety was the second highest (38 percent), followed by centralization of information across devices and personal sovereignty (also known as self-ownership), both with 36 percent of respondents noting concern. Another concern is the difficulty with vision and speech recognition and translation in association with AI. Long-term growth Respondents also see different factors impacting the semiconductor industry in the long-term. The biggest factor is that R&D investment will continue to be a major need for companies to meet, not just to enable connected cars, 5G, artificial intelligence, big data and the digital transformation, but also what comes next. Of the survey respondents, 45 percent saw R&D as the main attribute to long-term 2
semiconductor growth, followed by R&D capabilities with 38 percent. Geopolitics (33 percent) the stability of the world as a whole or how countries interact on trade and information sharing was also labeled as a factor in long-term growth. Consumer purchasing habits, which always change, were seen by 32 percent of respondents as a major influence on the long-term growth of the chip industry, along with market fluctuations and consumer buying confidence, both at 26 percent. Most companies are just beginning to implement some of these trends. Given the numerous benefits these technologies offer, they present ample opportunities for those who move swiftly to be a technological innovator and perhaps get a jumpstart on the competition or risk being left behind. Conclusion Technology is always evolving, but more so today than ever before. While 5G, IIoT big data, artificial intelligence, the connected car and digital transformation are all in their infancy, they are poised to have major implications for the future of the semiconductor industry in the next three years. ADVANCED ENERGY 1625 Sharp Point Drive Fort Collins, CO 80525 Tel: (970) 221-0108 ENGINEERING 360 MEDIA SOLUTIONS 201 Fuller Road, Suite 202 Albany, NY 12203-3621 Tel: +1 518 880 0200 ABOUT ADVANCED ENERGY Advanced Energy (Nasdaq: AEIS) is a global leader in the design and manufacturing of highly engineered, precision power conversion, measurement and control solutions for mission-critical applications and processes. AE s power solutions enable customer innovation in complex semiconductor and industrial manufacturing applications. With engineering know-how and responsive service and support around the globe, the company builds collaborative partnerships to meet technology advances, propel growth for its customers and innovate the future of power. Advanced Energy has devoted more than three decades to perfecting power for its global customers and is headquartered in Fort Collins, Colorado, USA. For more information, visit www.advancedenergy.com. Advanced Energy Precision. Power. Performance. 3
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